Private Lending Sector A Solution To Company Tax Debt

As the Australian Tax Office (ATO) ramps up its recovery of company tax debts, many Directors are faced with a challenging situation – refinance the tax debt or face the risk of personal liability and full enforcement action.

And while the traditional banking sector does not offer solutions in this space, it’s an area the private lending sector has the capacity, solutions, and appetite to assist.

Chief Executive Officer of IBN Private, Scott Roberts, said the ‘hangover’ from COVID’s early business disruptions has left many companies with unresolved tax debts and financials that are out of date.

“After more than two years of eased restrictions, business tax debt has once again become a primary focus of the ATO and this has caught some companies off-guard,” Mr. Roberts said.

“An estimated 50,000 letters have been sent to company directors in the past month warning of imminent director penalty notices.

“In order to avoid personal liability, directors need to pay the debt or put the company into liquidation within a designated timeframe set by the ATO.

“The property development and construction sectors are expected to be heavily impacted by this regulatory enforcement, which comes at a time of other pressures including supply issues and project settlement delays.”

And this, says Mr. Roberts, is where short-term private lending can assist.

“The private funding sector is able to provide short-term solutions to companies, anywhere between one and 12 months, and up to two years,” he said.

“Importantly, this funding is able to be secured in a much timelier manner than traditional loans from the big four banks. If there’s an asset to secure the loan, then the hurdles are significantly different.

“And while the interest rates may be slightly higher, the short-term nature of the loan and the breathing space the capital provides is invaluable to companies as they rebalance and restructure.”

Established in 2004, IBN Private is Australia’s leading private lending specialist, providing commercial funding solutions for property developers and business owners Australia-wide, specialising in projects valued between $2 million and $200 million.

The group draws on its own funding, together with more than 250 private funders and investors, ranging from large superannuation funds to Managed Investment Schemes.

Mr. Roberts said private funding is a premium solution for a certain type and level of debt, enabling companies to resolve their financial pressures and structure their business to return to normal trading.

“Private funding is specialised lending built on the foundations of old-school relationship building and focused solutions, underpinned by seamless technology and systems,” he said.

“Complex lending solutions that traditional lenders generally shy away from – from development finance to non-conforming loans, succession planning, and the challenges of commercial tax debts – are where we shine and what we’re known for.

“Our overarching objective is to help businesses achieve their goals and structure their balance sheet to the point that they can transition back to the traditional banking sector with confidence.”

Mr. Roberts said short-term lending solutions were used industry-wide for meeting time-sensitive settlements, land banking, bridging finance, and purchasing business assets.

“With interest rates on the rise and the end of the financial year approaching, this is generally the time we see increased interest in private lending solutions,” he said. “When Plan A doesn’t work, the private lending sector is the Plan B that will deliver timely results.”